How To Determine Foot Traffic & Use Data To Pick a Business Location

Choosing a location: Your gut can tell you a hundred reasons why one spot is better than another. But at the end of the day, you just want to know one thing: Which spot will bring more customers?

Foot traffic is the number of people passing by a business on a given day. Measuring this gives you an estimate of how many customers a potential location will bring and thus helps you choose the ideal spot. This guide covers how to measure foot traffic to scout promising retail store locations, and also explores ways to track shoppers once you’re in a location.

For most stores, in-store tracking starts with having a retail point-of-sale system (POS) like Lightspeed. With detailed sales analytics and integrations with top in-store traffic trackers, it delivers everything you need to turn pedestrian traffic into profits.

Why Measure Foot Traffic?

Nearly all businesses rely on foot traffic to some extent. For retailers, it can account for most, if not all, of their sales. For restaurants, salons, and other services, the visibility they get from a high-traffic location can easily be their number one advertising source.

Needless to say, foot traffic is an extremely important factor when choosing a location. Arming yourself with this data allows you to make informed decisions, especially when you’re comparing multiple locations and/or negotiating rent.

That said, analyzing foot traffic is not always as simple as looking at a number. For one, the nature of your business may require answers to more specific questions like which location has more traffic during AM rush hour, or more pedestrians aged 20-35? Also, since high-density areas often demand a higher rent, you need to ask yourself how much foot traffic is enough and when it’s worth spending more money.

These are the questions we’ll answer throughout this guide. To start, let’s dive into one of the simpler questions: What is a good foot traffic count?

Foot Traffic Examples Around the USA

Location

Time Square, NYC (47th & Broadway)

San Francisco, CA (Union Square)

Peoria, IL (Main & University)

Description

One of the busiest urban areas in the world

Downtown upscale shopping district

Major intersection in a small Midwestern city

Foot Traffic (1 Day)

176,000Source: Time Square Alliance

10,000Source: Motionloft

3,000Source: Peoria Journal Star

For most urban commercial areas, you should expect a foot traffic count of at least a few thousand pedestrians per day. Anything lower, and you’re probably looking at a more secluded commercial, residential or industrial area.

You should also look closely at peak hours. Most locations will see foot traffic peak at certain times of day, such as morning/evening rush hour, with anywhere from 300 – 1,000+ pedestrians per hour. Web-based foot traffic and demographic aggregators like LocationGenius give you this type of comparison using a mix of pedestrian cell phone signals and physical sensors. These tools report a range of useful demographic information of passersby in potential spots, including age groups and gender.

When Is Foot Traffic “Worth It”?

Next, let’s get into the trickier question of when it’s worth paying more in rent for more foot traffic. If you’ve scouted for locations before, you probably know this scenario:

Location A is on a beautiful corner, full of nearby amenities that draw a lot of people out. Rent is high, but foot traffic numbers are fantastic: 8,000 daily pedestrians.

Location B is a short walk off the main strip. Rent is much more reasonable, but foot traffic is not as great as A: Just 2,000 pedestrians.

The question is: How much more money is “worth” spending on Location A vs. Location B?

To find the answer, we have to estimate how many sales will result from the better location. While this is tough to answer with any certainty, we can use the following formula to get a rough idea:

Estimate your percentage of sales that come from walk-ins (vs. customers who commute to your business.) For a convenience store, this might be 90%. For a specialty shop like a guitar repair service, this will be much lower – potentially just 10%.

Now, look at the difference in foot traffic between the two locations. In my example above, location A has 4x more visitors than location B.

Next, multiply the percentage you came up with in step 1 by the number in step 2. The resulting number is an estimate of how much sales will increase due to higher foot traffic.

For my convenience store, this is a whopping 360% (90% * 4) – or, to put it another way, sales will be almost 3.6 times higher in Location A vs. Location B. In this scenario, it’s probably worth paying 3x more in rent to get the better location.

For my guitar repair shop, the estimate is much lower: Just a 40% increase (10% *4) in the better location. Since a low percentage of my business comes from walk-ins, the improved foot traffic does little to boost my bottom line. In this scenario, I wouldn’t pay nearly as much for the better location.

Foot Traffic Demographics: Track More Than Just a Tally

Depending on your type of business, you may need to drill down further than the overall foot traffic. You may need to look more closely at the demographics of pedestrians, and/or measure foot traffic numbers during a specific time of day.

For example, let’s say you’re scouting locations for a new donut shop. Since you’re targeting commuters during the morning rush hour, you want to pay extra special attention to 6 AM – 10 AM traffic counts. One location could have more pedestrians overall, but if another has more in the AM, it’s probably a better choice.

The same can be said for demographics of pedestrians. Say you’re scouting locations for a childcare business. Since your target customer is parents of young children, you’ll want to know specifically about pedestrians aged 28 – 40.

The good news is that web-based foot traffic counters can give you this specific data without any extra work required on your end. Next, we’re going to cover the different ways to measure foot traffic in more detail.

Measuring Foot Traffic: The Traditional Methods

Traditionally, foot traffic was measured simply by counting everyone who passes by in a given period of time. This could be done a couple different ways:

Tally Counter– Use a clicker to manually count everybody who walks by. This, of course, requires you to watch all day (or hire someone to watch all day) from your store window, or from your prospective location.

Security Cameras– If you can set up a security camera outside, watch the footage on fast forward and estimate the number of people each hour. This is faster than using a clicker, but it can still be time-consuming, especially if you want to measure multiple days.

Automatic door counters can also measure foot traffic, but only those entering your store. We explore ways to measure in-store foot traffic, and why you should, in the last section of our guide.

The Problem with Traditional Measures: No Demographic Data

Now, besides the time commitment, manual counting has one key downside: You can track how many people there are, but you don’t know anything else about them. Like, what are their ages? Do they tend to be regulars in the neighborhood, or from out-of-town?

This matters because most businesses have a typical customer “type.” For instance, for California-based salon Hair by Heinz, this was women aged 30 to 45. When Heinz was considering a potential second location, he wanted to know the number of pedestrians who fit his profile – not just the number overall.

Measuring Foot Traffic: The Next Generation

The solution for Heinz was to use a tool that provides foot traffic reports using location-enabled mobile phones, like LocationGenius. This means you don’t have to do any manual counting – you can simply log in and view a number of foot traffic and demographic reports and compare numbers among potential locations.

Web-based traffic tracking can also capture much richer data, like the age group and gender of passers-by, than manual counts. This is because it gathers data from cell phones. The system recognizes when mobile phone users pass by your business. Then, for each passerby, it adds to the tally, records the time, and logs their age and gender. This data is saved in an anonymized format, so personal identity is never revealed.

Compare Locations Using Web-Based Tracking

A lot of businesses use foot traffic data to compare multiple locations. You might be considering a few different potential places to open a new shop, as we discuss above. Or, you might be comparing a new spot to your existing location or analyzing the competition.

Whatever the purpose, most web-based retail traffic tracking systems allow you to input up to two locations per report. Then, once complete, you can see how each location stacks up in a side-by-side comparison. Compare not just the foot traffic count, but the demographic makeup of each location and the busiest hours.

Other Ways to Use Foot Traffic Data

As you’ve probably sensed at this point, there’s a lot more data to consider than mere foot traffic counts. When it comes to choosing a location, demographics are helpful to find your specific customers – i.e. what percentage of this foot traffic is actually likely to enter my business? But what else can it do?

Here are some examples of how foot traffic data has helped businesses increase sales and improve their marketing efforts:

Refine Your Direct Mail Ads: Digital Consumer Insight shows you where consumers live, down to the zip code. This will help you pinpoint exactly where to send your targeted mail- as was the case for Mathnasium of Cortlandt. Owner Annie Tan found that the vast majority of pedestrians were coming from just two zip codes. She decided to stop wasting her budget on the others, and rather, focus solely on these two areas.

Learn the Busiest Hours: Say you’re considering opening for breakfast, but want to know exactly how the morning crowd compares to the lunch crowd? Or, perhaps you want to find the ideal time to pass out flyers on the sidewalk? Learning the ebb and flow of pedestrians throughout the day has numerous advantages. For Veritas Studio Wines, discovering their foot traffic was highest from 1 pm to 10 pm prompted them to drop their morning shift and extend their evening hours.

Adapt to the Seasons:On a similar note, comparing foot traffic across weeks or months can reveal even more. Bob Valaika compared data for his restaurant Shabu during two different months: A “regular” weekend in May, and a weekend in January when Sundance Film Festival was in town. The results showed a major change: Whereas foot traffic normally leveled off after 5 pm, during Sundance, pedestrians thrived until 1 am. Armed with this insight, Bob was able to change his operations during Sundance.

What About Foot Traffic Inside My Store?

If you’re already in business, counting the number of people entering your store can answer a whole other set of questions: What are my busiest hours? How are XYZ promotions improving business? Has my new window display increased walk-ins? Where do shoppers spend the most time in my store?

“Advanced analytics are changing the landscape of how retailers operate. Technology that helps retailers understand their consumers at a physical level is becoming critical to creating new experiences that connect with the customer on an emotional level. Understanding when and how customers interact with your store as they walk in and out, as they browse, or at what point an employee’s interaction is needed, helps retailers better merchandise and staff their stores.”

Measuring entrance count and in-store traffic flow can be difficult with traditional infrared sensors or manual tools like clickers. This is where retail store traffic trackers like RetailNext for Lightspeed POS step in to give retailers deep analytic insights into both passerby traffic data, as shown below, along with customers’ in-store shopping behaviors.

Image Source: Lightspeed POS & RetailNext

Retail store foot traffic systems only work once you’re in your location, but they gather data on traffic and shopper behaviors both outside and inside your store. This is something that traffic location aggregators can’t deliver. Systems like RetailNext integrate with retail point of sale (POS) systems like Lightspeed POS to deliver a wealth of customer behavior information. With it, you can track walk-in numbers, store flow patterns, and even display popularity, as shown below, to help make smart merchandising decisions and garner higher profits.

Image Source: Lightspeed POS & RetailNext

In-store customer behavior data is a powerful tool that helps retailers test and tweak all types of promotions. With it, you can measure the effectiveness of store layouts, flow patterns, product displays and more, using real-time reporting in your store’s POS screen, like this:

Image Source: Lightspeed POS & RetailNext

RetailNext and similar in-store shopper tracking systems can even alert your staff to attend to customers waiting for assistance at checkouts or dressing rooms in real-time.

Bottom Line

Measuring foot traffic reveals the busiest (and thus ideal) locations for opening a business. This number, however, is just a small part of the picture. When you use a mobile-enabled foot traffic tracking solution, you can drill down your foot count by age and gender, and more. You can also explore trends like the busiest time of day, the busiest day of the week, or compare locations side-by-side.

Once in your location, you can turn to retail store traffic trackers to measure the effectiveness of your external and internal marketing, from storefront signage to seasonal displays, by tracking walk-ins and engagement as shoppers move through your store. Once you have your data, you may want to create custom charts to share it with business partners.

Or even easier, explore how Lightspeed POS integrates with RetailNext to give you a 360-degree retail management and analytics platform. Check out their free demo.

About the Author

Krista Fabregas is a staff writer at Fit Small Business and editor of the Ecommerce Section. Krista launched her first ecommerce site in 2001, and soon grew to operate two niche B2B and B2C sites, a 10K square foot warehouse, and staff of nine. Combined, her sites sold more than $1.5M annually for several years. Krista now shares her hands-on experience with others looking to expand into online sales. When not helping small business owners launch and grow efficient ecommerce operations, Krista enjoys writing fiction and nonfiction and riding horses and motorcycles in her hometown of Houston.

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Comments (10)Disclaimer: Reviews on FitSmallBusiness.com are the product of independent research by our writers, researchers, and editorial team. User reviews and comments are contributions from independent users not affiliated with FitSmallBusiness.com's editorial team. Banks, issuers, credit card companies, and other product & service providers are not responsible for any content posted on FitSmallBusiness.com. As such, they do not endorse or guarantee any posted comments or reviews.Post Your Comment

Oh, that depends on many factors. In a walking city center, you’ll potentially have much higher rates than a suburban area. But even then, many suburban areas have walking centers for shopping and dining. These will have higher pedestrian conversions for eateries located there than strip center units that are primarily drive-by. Plus other factors like climate and demographics all play into the equation. You need to consider many local factors in a target pedestrian conversion rate. A good restaurant-focused commercial real estate pro in your area would be a good source for this information and guidance. I hope this helps. Good luck!

This great info; but how does a person determine the “percentage of sales that come from walk-ins” for a new business; say tutoring or learning center. Is there a table I can lookup for industry? My search has been futile thus far.

I’m not aware of any source that has collected this data by industry. However, for a tutoring or learning center, I imagine it will be fairly low. Assuming your service is appointment-based, an interested pedestrian would need to call ahead. Most will be doing this at home after a web-search, or after they heard about a service from a friend.

Fittingly, the experts I’m finding online who discuss marketing ideas for a tutoring service all seem to focus on web-based marketing, like SEO, PPC and Facebook ads. This implies that most of their business is coming from online searches, rather than walk-ins.

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